{"id":36993,"date":"2022-12-26T23:03:14","date_gmt":"2022-12-26T23:03:14","guid":{"rendered":"https:\/\/www.africa-press.net\/zambia\/?p=36993"},"modified":"2022-12-26T23:03:14","modified_gmt":"2022-12-26T23:03:14","slug":"the-zccm-ih-fqm-kansanshi-mine-proposed-transaction-is-in-bad-faith","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/zambia\/all-news\/the-zccm-ih-fqm-kansanshi-mine-proposed-transaction-is-in-bad-faith","title":{"rendered":"The ZCCM \u2013 IH \/ FQM \u2013 Kansanshi Mine proposed transaction is in bad faith!"},"content":{"rendered":"<p><span style=\"color: #ff6600\"><strong>Africa-Press &#8211; Zambia. <\/strong><\/span>The proposed conversion of ZCCM \u2013 IH\u2019s right to dividend in FQM\u2019s Kansanshi Copper Mines, to right to royalty, is ill-advisable. Since royalties are tax deductible, that is, they get subtracted from revenues before taxes are computed, such a conversion would take away some much needed tax revenues from ZRA. ZCCM \u2013 IH should not start participating in tax gimmicks that take away funds from public coffers. The people of Zambia expect better from their parastatals.<\/p>\n<p>The fallacy that royalties are \u2018guaranteed\u2019 whether a company makes profits or loses is patently false. Royalties go up and down, depending on levels of production. Also, when the price of the commodity being mined goes down, royalties, like every cost item on the profit and loss (P&amp;L) statement, are subject to re-negotiations, postponements or even cancellations. In reality, royalties may also face the same subjectivity dividends face in times of economic uncertainty. Trust me on this point; I\u2019m speaking from experience!<\/p>\n<p>At a press conference this week of December 5th, the Minister of Finance, Dr. Situmbeko Musokotwane made mention that ZCCM \u2013 IH\u2019s cash inflow from FQM would more than double under the royalty model, if converted, compared to the dividend model. The honorable minister needs to realize that, there is no such a thing as free lunch. There is no such a thing as free dividends either! The lack of corporate financial literacy, and the lack of bargaining experience, is what keeps Zambia continue to sign agreements in the mining sector that do not serve the best interest of the republic!<\/p>\n<p>ZCCM \u2013 IH should not be fixated on which one of their investees pays out a dividend, and which one does not. Dividend payment is a matter of subjective policy. What ZCCM-IH should focus on, is which investee is growing in value. It would interest readers, that one of the best stocks to invest in on the New York Stock Exchange, Amazon, has never paid out dividends ever! Did you know, that Tesla, has never paid a dividend either, but it is one of the best enterprises to invest in? The idea is to invest in potential growth, not in a dividend or royalty policy. There are various ways to extract liquidity out of an investment, apart from dividends or royalties.<\/p>\n<p>ZCCM-IH needs to stop obsessing with dividends or royalties. She needs to focus on value creation, growth, efficiency and operational excellency. Part of the efficiency strategy should be tax transparency. This entails putting in place best in class mechanisms, outside of a mare financial audit, that prevent transfer pricing, base erosion, and other questionable accounting practices. It is concerning the level of simplicity the honorable minister of mines, Mr. Paul Kabuswe, is approaching this sophisticated matter with. Bally needs to fix this transaction, by pausing it, and offering a robust counter offer. I have confidence in him. I always have always had, for decades!<\/p>\n<p><strong>For More News And Analysis About <a href=\"https:\/\/www.africa-press.net\/zambia\">Zambia<\/a> Follow <a href=\"https:\/\/www.africa-press.net\/\">Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Africa-Press &#8211; Zambia. The proposed conversion of ZCCM \u2013 IH\u2019s right to dividend in FQM\u2019s Kansanshi Copper Mines, to right to royalty, is ill-advisable. Since royalties are tax deductible, that is, they get subtracted from revenues before taxes are computed, such a conversion would take away some much needed tax revenues from ZRA. ZCCM \u2013 [&hellip;]<\/p>\n","protected":false},"author":84,"featured_media":36992,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5,248],"tags":[234,235,233],"class_list":["post-36993","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-to-homepage","tag-africa-press","tag-africa-press-zambia","tag-zambia"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.1 (Yoast SEO v27.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>The ZCCM \u2013 IH \/ FQM \u2013 Kansanshi Mine proposed transaction is in bad faith! - Zambia<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/zambia\/all-news\/the-zccm-ih-fqm-kansanshi-mine-proposed-transaction-is-in-bad-faith\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The ZCCM \u2013 IH \/ FQM \u2013 Kansanshi Mine proposed transaction is in bad faith!\" \/>\n<meta property=\"og:description\" content=\"Africa-Press &#8211; Zambia. The proposed conversion of ZCCM \u2013 IH\u2019s right to dividend in FQM\u2019s Kansanshi Copper Mines, to right to royalty, is ill-advisable. Since royalties are tax deductible, that is, they get subtracted from revenues before taxes are computed, such a conversion would take away some much needed tax revenues from ZRA. 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